Some Common Loan Modification Scams to be Aware of!
Because loan modifications are changing every day it’s important you educate yourself about some of the most common scams to look out for.
Phony Counseling / The Rescuer
Posing as a counselor, the scammer tells you he can negotiate a modification deal with your lender to save your house— as long as you pay a “processing” or “administrative” fee first. For that fee he’ll handle all the negotiation. He may even tell you not to contact your lender, lawyer or housing counselor and may even insist that you make your mortgage payments directly to him while he is in the negotiation process. Once you pay the fee, or even a few of the mortgage payments, the scammer disappears, along with your money.
Fake “Government” Modification Programs
Claiming they are affiliated with or approved by the government, the scammer asks you to pay a high, up-front fee in order to “qualify” for government mortgage modification programs. In cases such as this the scammer usually has a company name and website that sounds like a legitimate government agency. One way to spot this scam is to check out the website – it may sound like a real government agency, but the website URL may end with .com or .net instead of .gov. Other terms such as “federal,” “HAMP,” “MHA,” “HARP” or other words related to official U.S. government programs may be used to help sell this scam.
Your lender will be able to tell you if you qualify for any government programs. You do not have to pay a fee in order to benefit from these programs if you qualify.
Loan Auditor
The scammer using a title of forensic or mortgage loan “auditor” offers to conduct an audit of your mortgage loan documents to determine if your lender was compliant with state and federal mortgage lending laws for an up-front fee. The scammer will say you can use their findings to avoid foreclosure, accelerate the loan modification process, reduce your loan principal, or even cancel your loan.
There is no proof a forensic loan audit can save your home from foreclosure because your lender is not required to modify your loan to make it more affordable even if you win a lawsuit against your lender. Even If you cancel your loan, you will have to return any borrowed money to the lender, which may result in you losing your home.